Great blog posts about macroeconomics

It may be thought that baseball is no longer America’s pastime, but there is no denying that baseball has become more profitable. Since there is revenue sharing of ticket sales in the MLB, there is a strong incentive for teams to make money in other ways. The most common way teams have been increasing revenue is by building new stadiums that allow for more money spent per fan. Newer stadiums consist of features such as an emphasis on seating on the infield side rather than the outfield side of the park, larger concourses for food and beverage sales, leather seats, and more luxury boxes that are not included in revenue shares.

A team like the Boston Red Sox, however, are an aberration to this trend. The Red Sox are the third most valuable MLB team; worth approximately $3.2 billion according to Forbes.

However, that is just team value. Looking at revenues alone, the Red Sox receive the fourth highest revenue with $398 million annually behind the San Fransisco Giants, LA Dodgers, and New York Yankees. That being said, aside from Wrigley Field, home to the Chicago Cubs for the past 103 years, Fenway Park, built in 1912, is an average of 87.5 years older than the 28 other MLB teams.

Compare Fenway Park to (the new) Yankee Stadium, and there is a seating deficit of 11,693 seats. Fenway still uses many small wooden seats while Yankee Stadium has many premium leather seats.

Despite its age and lack of grand amenities, the Red Sox are still one of the most profitable teams in baseball. The Boston Red Sox therefore must be commended for their business strategy because they do not get much revenue from parking, luxury boxes, or in-stadium naming rights. Most of their venue revenue must come from gate sales, concessions, merchandise, and in-stadium advertisements.

If fans have a preference for historical parks, then the Baltimore Orioles did well in 1992 when they built Camden Yards to have a retro feel. But do fans have higher preference for history or amenities? If Fenway Park is any example, then in the very least, history can compete with amenities.

Great post Emma! Adding to your point, looking at the Miami Marlins, obviously not a very successful team as of late, but the introduction of their new stadium has not seemed to bring in much revenue. However, it is important to put the different franchises into perspective, the Red Sox will be a more profitable team due to their large fan base, great history and success.

The Chicago Cubs are another great example of this historic team and stadium that is still worth a lot(the 5th most valuable franchise). While recently they have done various renovations to add more modern aspects to the stadium, for the most part they have not expanded the seating capacity or improved seat luxuries. With a smaller and older stadium than most other teams, they too have to use a similar approach as the Red Sox in generating as much revenue as they do. It certainly helps for both the Red Sox and the Cubs that they have loyal fan bases and recent success as Jack mentioned.

I agree with this and I do think that history is an important aspect of drawing in a crowd, especially for a game such as baseball. Classic rivalries such as the Red Sox and the Yankees bring in bigger crowds than do an average game. A rivalry such as this has existed since Babe Ruth was traded from Boston to New York, and will continue to exist until the end of baseball. I think that in cases such as Fenway and in Chicago, there are such deep-rooted histories associated with the teams and such loyal fan bases, as Tim said, which adds on to the economic success of the teams.

Just as a point of interest, back in my early days as a sports economist, I worked with the “Save Fenway” coalition. My colleague and I were asked to make a case that a small, historic Fenway could be as big a money-maker as a big, new monstrosity so that the Fenway didn’t need to be torn down. Apparently we were convincing since we won the day, and apparently we were also right.